How I Made it 5x Easier to Quit My Job and Start a Business

Yesterday I was brainstorming with David from Tropical MBA semester II about some ways to bring in revenue across a wide variety of sites we are working on. We were discussing the following thought experiment:

Would you rather make $1,000 in monthly income from eBook sales or $4,000 from providing consulting services (for example helping a medium sized business with their SEO efforts, copywriting, and web development).

It didn’t take us any reflection time, “eBook sales!”

In other words, not all income is created equal.

Of course passive income from real estate or ebook sales is better than a paycheck, but if you take it a step further and decide how much more valuable it is and stick numbers to it has the potential to be a watershed moment. It was for me.

I set out to make a ratio. How much more valuable is location independent money than “job” money? My gut told me that if I could generate 20K in income from working on projects I had equity in from anywhere on the planet that would be equivalent to 100K made at my job. That’s a 5X multiple. The 5X multiple was a profound shift in thinking for me and it lead directly to me getting over my worries of falling behind.

I would be just as “rich” making 20K as I was making 100K at a job.

If I could generate 20K of income I wouldn’t be falling behind at all.

Looking at things this way flipped my perspective and gave me courage.

So I quit.

So how do you determine how much location independent income is worth to you?

Take an inventory of the experiences you want most.

I wanted to ensure that I could afford all the experiences I wanted in life. It’s amazing to me now that I didn’t have a specific idea of what I actually wanted in terms of experience.

So I set out to take an inventory. What were the big things I wanted to do?

Start a business

Buy a laptop (didn’t have one when I read 4HWW!)

Record a record album

Study blues improvisation

Invest in other smart entrepreneurs

Move to a new country for a year

Move to another one after that :)

Go on a long motorcycle trip and cross borders

Travel through countries with just a backpack

Write blogs and make a podcast

I thought if I could do the things on the list above I wouldn’t be falling behind at all. I’d be getting ahead! I’d be rich!

What was striking about my list was that it wasn’t very cash intensive, even something like “investments” can be done without a lot of cash– this blog is an example of that. There are many awesome things that are cash intensive that don’t show up on my list (raising a family and sending your kids to elite schools is an example), however its my experience that most incredible experiences are much more time and mobility intensive than cash intensive.

A relatively inexpensive experience that I value very highly like motorcycling across South East Asia for a few months might be impossible to acquire, even for very high earners. In my case it would have been next to impossible to start regularly obtaining these kinds of experiences within a 5 year timeframe without a radical change.

What’s your ratio? How many multiples is ‘location independent’ money worth to you?

Love the goal list, Dan. Creating a set of challenges like this is the first step in what has been popularized as lifestyle design. By looking ahead, by envisioning the things we’d like to accomplish, we are better positioned to propel ourselves forward.

Seems so simple but really was something I didn’t do before hand. Worked like a charm! :)

Tyler Wells, CPA

Getting yourself to take the plunge is huge. My strategy has been to pare down my living expenses to what I can make oneline, and to save all my salary for the move. My wife and I could do it now, but haven’t made that courageous big step like you have yet.

Sounds like you are in great shape! The good news its that its all upside from here on out… also I like the idea that now I’m able to be 100% invested in earning income from virtual locations, my hope is that will pay off exponentially over the years. Where are thinking of moving to? Any plans to make the leap?

My personal goal within the next 6 months is to make $500 from my online business. I believe it will be possible and, once I accomplish that i will be able to quit my job (living off of my small earnings and my savings – since I have very few expenses) and focus even more of my time on growing my business (hopefully increasing my income exponentially). Getting the snowball started is the hardest part, but once you reach critical mass the opportunities are endless. Can’t wait for that day : )

Quitting a job to earn income as an equity owner, running a company thats location independent sounds like a huge, crazy risk to some people, but once you work out this multiplier the fear really fades. I actually think creating your own revenue is much more secure than depending on a paycheck with a company that could become victim of todays economy no matter how successful you are as an individual.

Agreed Colin, I was talking about this with my family the other day and if you were to graph it out most corporate gigs will slowly raise from say 70K a year to a ceiling of 150K if you are lucky… someday it will hit a big WALL! whereas income via equity raises slowly but will likely “hockey stick” at some point and of course the sky is the limit. I feel much more secure than ever and my cash draws on my enterprises are lower than my corporate salary was.

Hey Randall, check out lifestylebusinesspodcast.com. Those are big questions!

Krisbolton

hey i was just commenting on your youtube pages and having a look around your videos etc. I have to agree with alot of what you are saying about earnings and lifestyle. I own a online supplement company in the uk. in 2004 i was working at jpmorgan, hated, so went full blast at looking for a business. On my 2 week break from jpmorgan chase i decided to sell some supplements on ebay (i would dropship them from another cheap site i found). the day before going back to work my 10 day auction was finishing with no sales. I went to bed with my computer on, and heard a ”BING” on my msn, clicked it, it was from ebay saying i had 1 sale. i need to add, i had no stock, no money (i was about $50 overdrawn and only had a $200 overdraft) WOW. That 1 buyer changed my life, if he hadnt bought, i would have given up and gone back to work the next day, but instead, i called in sick i thought i would give it a better go, i launched several more auctions and got sells the very same day, and the next, and the next, suddenly within 2 weeks i was making more from my online business and i was chase, i never went back to chase. Being a internet business, means i can be anywhere in the world, so i quickly decided wow now i can live out my dream and buy a around the world ticket, which i did, went travelling for a year, during that year ended staying in the philippines and opening a games arcade there too in boracay, ive been living there ever since (with frequest travels to other countries ongoing). Up until last year, i was earning around $7000-$8000 per month profit. Then multiply that by the fact that living in a country (philippines) where 2 beers costs about $1, means ive lived a life i could never even dreamt of. Last year, a serious sickness (decompression sickness from scuba diving) and the recession meant my earnings went way down to about $600-$800 PM. AND GUESS WHAT?? nothings changed!!!! i still live the same way!!! i still live in paradise, i still relax on the beach all day in a bar with my laptop, go for swims, work for 20-30 mins per day MAX, bbq on the beach at night. Im living a life i would dream about, and im just a regular guy, no rich parents, no million dollar ideas, i dont have a degree, i just started a simple business online. Point to my story is for ppl reading this, to realize, go open a online business, or a business which is managable through other people, and as soon as your earning $500 per month, go live some where exotic, thailand, philippines, malaysia, indonesia, you will live like a king (in terms of beach and beer being plentiful), be living life instead of just going through it. Stop waiting for that big certain point in your life. Go do it now if thats what you dream about, im surrounded by people here who did the same thing, Good luck.

Obrien_jeffrey

Well good sir…have you recorded a record album yet? feel free to include me in your next endeavor towards that goal!

haha great story! I know what you mean about the “BING” moment, I still remember my first “BING” sunday morning at brunch with @AnythingIan hanging out in San Diego, it totally changed my perspective on what was possible. Thanks for sharing.

Thanks, sure regarding passive income it implies some kind of black/white distinction, however I do strongly believe that different income sources have different qualities. As the owner of a company I draw a significant distribution on a quarterly basis. This income is in many ways more passive than the equivalent salary.

Agreed re: finding what you love. That’s really what this is all about….